Microsoft and Apple Facing Off Over Office for iOS Subscription Revenues, Not SkyDrive

AllThingsD is reporting that contrary to earlier reports that Apple and Microsoft were arguing over a 30% cut of storage upgrade sales through Microsoft's SkyDrive cloud storage utility, instead the companies are negotiating over revenue Microsoft would bring in as part of its Office 365 subscription service.

Quote:

Office has long been a cash cow for Microsoft and extending the platform to iOS will undoubtedly fatten it further. It will also bring significant benefits to Apple's mobile platform, ones for which Microsoft feels it is owed a discount on that 30 percent cut that Apple would otherwise command on Office 365 subscriptions sold to iOS users through it. The apps are just part of a subscription that includes desktop access.

So the company has been pushing Apple to adjust the 70/30 revenue split in its developer license agreement. Predictably, Apple has refused to comply. It's not yet clear what sort of concession Microsoft is seeking, but whatever it is, Apple's evidently not willing to consider it. Indeed, I'm told it's taken a "the rules are the rules" stance, which would suggest it's not at all willing to negotiate a different split. Apple's position: If a customer comes through its gateway, it feels it is deserved the commission outlined in 11.12 of its developer license.

Apple, for its part, says that App Store rules are fair and are applied equally to all developers, big and small.

Office for iOS has been rumored several times over the past year, but now seems closer to fruition than ever -- if Apple and Microsoft can come to some agreement. Yesterday, Microsoft leaked references to 'Office Mobile for iPhone', 'Excel for iPad', and 'PowerPoint for iPad'.

Would anyone who wants to use Office 365 on an iOS device really be deterred by having to use a traditional computer or a non-iOS handheld to buy their subscription? Are there any would-be Office users who have only an iPad?

well first of all it needs full compatibility with office for every other OS, which is doubtful since it will be small and crippled and not even office for mac is fully compatible with windows. If MS could get full office on there without crippling it and without compatibility issues, and if Microsoft gave them exclusive on tablets (never going to happen). I could see Apple doing this. Otherwise there is no incentive, they already have pages, keynote etc

Hmmm... I know that a link to a subscription service outside of Apple's subscription is forbidden, but what about simply a line that says "Tap here to subscribe to [whatever the office service is called] OR go online and save 30% off the subscription price!"

I understand that Apple is just being consistent here, but really, I think this whole subscription thing was asking too much and its been hurting the consumer most of all. When you build an app and you get apple to market it/sell it for you, then fine, apple can take a 30% cut. But, if your app is merely a gateway for other content, then apple shouldn't have its hands in it.

True, this is a bad example- this is Microsoft being sneaky, realizing it can't charge the high prices it usually does for office for an iOS app (competition pricing is much lower) and trying to make it a "service" to get more revenue via subscription payments. But, in other cases, like for say Amazon or Spotify, Apple is interjecting itself to take the money. If companies are more than willing to sell their own subscriptions and offer a free app as a gateway, then why should apple get a cut?

Really, what I'm saying is, Apple, give up on this subscription thing. I don't have any hard data, but it sounds to me like all its succeeded in doing is making it more difficult for app builders (making marketing their product harder unless they want to cough up 30%) and consumers (making them find their way on their own to make subscriptions when most developers won't pay the 30%). How many developers are really just giving in and forking over 30%?

This only highlights how stupid it is to force developers to use in-app subscriptions as a subscription shouldn't just be for the iOS version of an app, and if it isn't then Apple shouldn't be able to get a 30% cut of the non-iOS portion.

Apple's current system is fine for simpler set-ups where an iOS app simply requires a recurring cost to keep using it, but for more complex setups a different system is sorely needed. At the very least the system should only take Apple's cut when the payment is done through an iOS device; if the user decides to renew their subscription online on their Mac instead then that should go via whatever system is in place to enable that.

It's not as if this would cripple Apple's income, as tons of users will prefer the convenience of doing it through their iOS device; and that's exactly what Apple's cut is supposed to be for.

The feedback and control loop on this story was so short it was only spaced by one other post to the HOME PAGE. MS is right on top of these rumors and stories. AAPL has not budged. They own a massive ecosystem.

I am pretty sure AAPL will give MS a $150m loan when they are desperate. It's only right.

Release Office only for mobile windows and leverage that face: MS office available only on microsoft powered phones and tablets, great for businesses and consumers alike. The best compatibility between your desktop and tablet, at a level iOS cannot achieve.

__________________
Hardware / Software: The right tools for the job - be it Apple or otherwise.